Welcome to Teck's fourth quarter 2013 results conference call. (Operator Instructions) I would now like to turn the conference call over to Greg Waller, Vice President, Investor Relations and Strategic Analysis. Please go ahead.

Thanks very much, operator, and good morning, everyone. And thank you for joining us for our fourth quarter 2013 investor conference call. Before we start, I'd like to draw your attention to the forward-looking information cautioned on Slide 2. This presentation contains forward-looking statements regarding our business. However, various risks and uncertainties may cause actual results to vary. Teck does not assume the obligation to update any forward-looking statement. Before I turn it over to Don, I'd just like to point out that we're going to limit the call again to an hour today. So we'll have a fairly brief presentation portion and then got a Q&A. And at this point, I'd like to turn the call over to Don Lindsay.

Thanks, Greg, and good morning, everyone. I am going to begin with the highlights of our yearend and also go through our fourth quarter operating and financial results. And then I'll turn it over to Ron Millos, our CFO, to provide additional color on the financial side, including our 2014 guidance. And then we'll conclude, as Greg said, with the Q&A session. So starting with Slide 4. Operationally, we achieved very solid performance in 2013. I am pleased to report that we met or exceeded all of our production targets, which I will review in a moment. We also set a number of significant operating and sales records, including record annual coal sales and record annual throughput at each Greenhills, Antamina, Carmen de Andacollo and Red Dog. We also exceed the goals of our cost reduction program, which we had increased midway through the year, due to the success of the program. And in total, we identified over $380 million of annual ongoing potential cost savings at constant production levels and we implemented approximately $360 million of them as of December 31. And we will continue with this program to see if we can identify and implement additional savings. We are prudently allocating capital to the best risk/reward projects for future growth and we are responding to market conditions in the short-term to manage our capacity to invest. We have reduced our sustaining capital where it make sense, we've also deferred projects and their related capital expenditures, including delaying the Quintette mine restart and slowing down development of QB2 over and above the delays related to permitting. We announced with our partners that we are proceeding with the construction of the Fort Hills oil sands project. And this is the first step towards building an energy business unit that will…

Thanks, Don. I'm on Slide 17, where we've summarized changes in our cash for the quarter. Our cash flow from operations was $636 million, which reflects lower prices for all of our primary products. We spend $541 million on capital projects in the quarter, including $243 million on sustaining capital. Capitalized production stripping costs were $185 million in the quarter. Expenditures and financial investments and other assets were $47 million, which is primarily for Fort Hills. And you should note that effective October 30, we've changed how we account for our Fort Hills investment to recording our proportionate share of the project. So the capital expenditures are now captured in property, plant and equipment. We previously accounted for the investment using the equity method. We also paid $46 million in principal interest on our debt and we received $498 million in proceeds from the sale of various marketable securities. After these items, distributions and non-controlling interest, foreign exchange translation and other changes in working capital, we ended the quarter with a strong cash balance of about $2.8 billion. On the next slide, Slide 18, our pricing adjustments for Q4 are summarized. We had positive pricing adjustments of $10 million on a pre-tax basis in the fourth quarter compared with $20 million of negative adjustments in the fourth quarter of 2012. These adjustments are included in our income statement under other operating income and expense. The pricing adjustments are driven by the change in the quarter end commodity prices. And in Q4, the average copper price increased by about $0.04 per pound and zinc increased by about $0.02 per pound. The chart on the right side of the slide simplifies the relationship between the change in copper and zinc prices and the reported settlement adjustments. And as a reminder, the Canadian/U.S.…

Thanks, Ron. So in summary, on Slide 24, we had strong operational performance in 2013 and we met or exceeded all of our annual production targets. We exceeded our cost reductions targets in 2013 and we retained our sharp focus on those operating costs. We are prudently allocating capital to the best risk reward projects and we've maintained our dividend at $0.90 on an annualized basis. We're maintaining the discipline and focus on the long-term, while remaining mindful of the short-term. And with that, we'd be happy to answer any questions. Operator, back to you.

(Operator Instructions) We have a question from Sal Tharani from Goldman Sachs.

In your press release, you've mentioned about the cost inflation, which is offsetting the cost reductions you're implementing, I was just wondering, and you had alluded that there could be some significant cost inflation in some of those areas you mentioned. I just was wondering if you can give us some color on that.

I'll just make a quick comment before turning it to Ian Kilgour, our Chief Operating Officer, but what we said in the release is that while we've had good success on our cost reduction program on a number of items, we still can't ignore the affect of grade or haulage distance or strip ratio and what that might do to the overall cost. And so we just want to make sure that people are keeping those key factors in mind. Ian, over to you.

Thanks, Don. So we still, will be, certainly keeping up the focus on our cost reduction programs, bedding in the ones that we implemented last year and looking for extra cost reductions as we look to incorporate all the projects that have been implemented at our mines, throughout the other mines across the business. But we are pricing annual differences in things like haul distance and that's going to increase a little bit in 2014. We're also at a period in our maintenance cycle when we bought quite a lot of new trucks in the last couple of years and some of those are reaching the first engine overhauls and things like that. So there will be factors changing from year-to-year, but our focus on continued cost reduction and trying to come in as well as we can in the range of our cost guidance is a focus for all our people.

And my second question is, a recent press report about your involvement in the last Las Bambas project, I was just wondering if you can give us some color on that also?

Well, we don't comment on that kind of speculation. So we can't give you anymore color, but that is just the policy that we have to have one those kinds of things. We see a lot of speculation, and part of the reason that we see the speculation is because we have a large cash balance and we are able to look at opportunity. You can assume that our corporate development department is mandated to look at everything. Some things they look at for five minutes, some things they look at for five days, and some times they look at for five weeks and with a lot of detailed due diligence. But we're never really going to comment on any specific opportunity.

The next question is from Mitesh Thakkar from FBR.

Just a quick question on Relincho. With the feasibility study behind us now, what kind of market conditions are required to bring that project online? And is it more of a copper market situation that you are focused on right now or just where the coal markets are and the amount of cash flows and other CapEx priorities?

I think it's more of a company decision in terms of prioritization of our capital allocation. We have done a lot of work comparing QB2 to Relincho, and for a number of a reasons, including the fact, that there is current Quebrada Blanca in operation with the work force, and the rest of it, we've put a priority on QB2. And so we would want to be doing two projects at once, from a project development capability and use of people and skills and executive experience point of view and also from a balance sheet point of view with Fort Hills going ahead. So we like Relincho and we know it's going to be something that world needs and it's going to be very valuable one day. But in terms of its just place in the queue, it's behind. So I think finish the feasibility is a bit of optimization to do, but we're just going to put it on hold until these other things run their course.

And just switching gears to Highland Valley a little bit, you had a pretty good quarter, the fourth quarter. It produced about 135,000 tons kind of a run rate. Can you explain to us how the 2014 guidance looks kind of flattish versus '13, even though the optimization should be done and you should get some benefit from there?

I'm going to turn that over to Ian.

As the optimization comes in we're already getting benefit from the increased throughput due to our pebble crushing circuits and with the flotation circuits coming on line, fully bought at the end of March, we expect a little bump in our copper recovery and that will be fully in place by the second half of the year. However, the guide is fairly stable, so that means that we're not going to see a significant increase in overall production.

The next question is from Orest Wowkodaw from Scotiabank.

Two questions. First of all just getting back to the coal cost. I mean back on the October conference call, we certainly got the indication that you expected costs to stay around $50 a ton for the foreseeable future. Just curious what's changed between then and now in terms of the guidance for this year at $55 to $60?

Ian, over to you.

Well, I guess the things that are a little bit different going forward in 2014 are, as we said, our haul distance increases somewhat, and that means that we have to have more trucks operating to move the same amount of material. We do had, as I said, some cyclic increase in the maintenance costs. There are a few other factors that come in. We've got labor inflation, just the yearly increases in all of their labor agreements. Fuel prices have gone up a little. It will be the first year, where we do had some operating cost for our selenium plant. So all of those things combined to give us that increase for 2014.

Is there any impact from say, just lower volumes than maybe you thought before in terms of spreading fixed costs?

No. We expect to produce more coal in 2014, than we did in 2013. So there is no sort of dilution.

I just mean in terms of kind of previous expectations. And just second question in terms of copper, I mean at the Investor Day you guys made it pretty clear that you made it a high priority to try to find some copper growth to bridge you to QB2. I mean, given the feasibility study results for Relincho, can you give us some color on where your heads at in terms of copper growth between now and QB2 and Relincho, which both looked like they're kind of end of decade projects?

Nothing has changed from our comments at the November meeting. We are constructive, quite positive on the long-term outlook for copper, in fact, maybe even more so today than we were in November. I note as each new forecast comes out for the surplus in copper in 2014, 2015, the number seem to get smaller and the drop-off in copper production in Chile that is forecast for the second half of this decade is quite material. So yes, we would be interested in adding to our copper portfolio. And second part of the answer would be similar to what I said earlier, our corporate development department, it is their mandate to look at everything. And they are certainly looking at everything that's available in copper. But at the moment, we haven't found anything that make sense for us. One other point I would make is that while we would like to do that and that would sort of fit backfilling some decline in production that we have in the next couple of years. We don't have to do that. In the end, we are diversified company. Our diversified strategy is based on having the flexibility to allocate capital to where the highest returns are. So if we see something, that we think, that the returns long-term are better in the project in some other commodity, we can do that even though we have decline in copper production. So I think it's important to understand that principal.

The next question is from Meredith Bandy from BMO Capital Markets.

I just wanted to ask, I guess this is sort of a follow-up on the other one. QB2, it sounded to me, and I could have gotten this wrong, but you're resubmitting the SEIA in Q2, which I thought was up a couple of quarters. But then it also sounds like that is still a little bit on the back burner. Could you just update us on what sort of the timeline could potentially be at QB2?

Yes. That's not quite right and that we understand it is a bit confusing. Ian, why don't, I turn it to you for the timeline?

Thanks, Don. Meredith, we are going full steam ahead on our QB1. SEIA, we expect that to be submitted in Q2 this year. And as soon as we do that we'll be turning our attention to the QB2 SEIA in moving that forward. We've been working very closely with the authorities in Chile and have very, very good relationships in terms of being able to handle all the -- anticipate all of the issues, which may be rising as part of this SEIAs. So we're very confident that we can move through a very orderly program to get, first of all, QB1 and then QB2 approved.

So the SEIA for QB2 would still be late 2014, is that right?

Yes. We would be willing to submit that as soon as we basically get approval for the QB1, SEIA, which of course depends on the government, but certainly by the end of 2014, start of 2015. That's where we'd hope to be.

And then just quickly on the CapEx budget, is there any of the selenium cost in there? I mean have you just taken out the $600 million over the next five years given that you are working on a new plan for that? Or how should we think about this?

It is included in the sustaining capital. Earlier, I had given the indications that we hope to have sustaining capital to $500 million not counting selenium. So you're seeing $620 million including corporate, so $600 million that includes selenium cost for 2014.

So for now we'll just leave that with the $600 million previous five-year estimate, right?

That's correct.

The next question is from Greg Barnes from TD Securities.

I'm surprised, I'm going to ask this question, and be the first one on the coal pricing. Don, or someone else, I guess, you talked in the discussion about more of your coal sales going into spot price contracts. I think the last guidance we had was around 30% of volume will be spot price, is that increasing?

Yes. It is. And I will turn it over to Réal Foley to give more detailed answer. Réal Foley: Thanks, Don. So Greg, the guidance that we gave before, talks about our overall ratio of sales price on shorter than quarterly basis, above 40%. That's what we were expecting for 2013 and that's what our sales came in. That compares to around and above 30% in 2012, so maybe that's where the 30% that you're remembering comes from. And it was 15% to 25% prior to 2012. So the majority of our coal continues to be priced on a quarterly basis, but there is more coal being priced on a spot basis in the market. The important thing to remember is that we have long-term relationships and contractual arrangements with our customers and that gives us a level of certainty on volume. So yes, the pricing mechanisms are gradually changing in the market, but the basis for the business is really the long-term relationships and contractual arrangements.

Is 40% good against the 2014 then? Réal Foley: Yes. We are expecting 2014 to be somewhere around that level or maybe slightly higher.

And just one other question, quickly, on the capitalized stripping at $700 million this year. That's a quite a bit higher than I was expecting. Is that a go forward number or should that come down?

It will gradually come down, Greg, but it's a number of that it can get whipsawed quite easily because if you change where you're mining and what you're intending to do for any reason, it can be volatile number, because its done on a sort of that pit-by-pit or area-by-area basis.

Unfortunately, it's one of the hazards of IFRS. It's not something that we have a choice on it.

The next question is from Jeremy Sussman from Clarkson.

Your 2014 coal sustaining CapEx of $215 million seems to compare favorably to 2013 levels even when I account for selenium. Just curious if you can kind of walk us through where you've been able to save on the sustaining CapEx front?

Over to you, Ian.

We expected to be able to reduce sustained capital in this year, because of the investment we've made in the business over the last three years, and so we have come to the basically the end of our sort of brownfields growth phase. So basically the sustaining capital on things like truck, shovels, drills has decreased, that's probably the mine area, where it is lower than previously.

And then just can you remind us if you do decide to go ahead with Quintette where it kind of fits on the cost curve within your mines?

Quintette would come in around the middle of our range in terms of cash costs.

The next question is from Lucas Pipes from Brean Capital.

Don, if I understood you correctly you said in the prepared remarks that copper production will begin declining in 2014. Is it right to interpret that as that at 2015 production could yet be lower than 2014 even though Antamina should recover?

Yes, it's right. We haven't put out a number as yet, but I think you will see in the quarterly today that Duck Pond will be showing down, so there is lots of production there. And QB will continue to decline somewhat, so it will be declining this year versus last year and then stabilize a bit. So we have some moderate losses there and then we hope to make some of it on the Highland Valley. And then in Antamina's case, of course, I really should be letting Ian speak to this, but it really depends on the grade and the mine plan for that particular year. As you know we're going to already into a lower grade phase. Ian, do you want to add some color on that.

I guess, Antamina is a complex deposit and as the mine plan progresses, the percentage of copper only ore versus copper zinc ore changes. It was always foreseen that there would be a period of time lasting a couple of years, where the copper production reduced and the zinc production increased as well as percentages of ore types changed. So that's a period we're going through now, and the overall trend will be back towards gradually higher copper production.

And then on Quintette, do you have a sense on CapEx in terms of what it would take to complete that project?

At this stage, we're working very hard to save every cent off, we can of that project. So it will be a bit pretty premature to give a number on that.

The next question is from Brian Yu from Citi.

I have just got a follow-up on the prior question about coal contracts, spot versus contract. And we saw something similar in the iron ore markets where your customers were going more towards spot and prices were falling and then leaning towards contracts where prices are increasing. Can you maybe elaborate a little bit more on the term, how long these things last? And is there any flexibility in there for your customers to move around between those two types of purchases?

Good question. Réal? Réal Foley: Thanks, Don. So when we look at the last year, Brian, starting from about the second quarter in 2013, a number of customers actually reduced the portion of quarterly price tons and requested the suppliers to price the portion of their contracts on the spot basis. And it was an environment of low steel prices, I guess, that helps to control cost. And really, our coal sales profile reflects that. What we're seeing in the market this year is there is the continuation of that. A number of customers are continuing to request that a portion of their contract should be priced on the spot basis. So we expect, as I said earlier, to sell somewhere around 40% or maybe a little bit higher than that in 2014 on the spot price basis.

And these requests are they made or committed on an annual basis or do they make these requests on a quarterly basis? And I guess, I'm trying to get a sense of, say, we do get a recovery in the coal prices and spot time moves up above contract, that it's still good for us to use this 40% number and that it's suddenly not going to start to drop-off as spot prices go up. Réal Foley: So typically those arrangements are made on an annual basis. So the ratio of spot to annual, if a customer has a contract like that, will be agreed at the beginning of the year. So that when the market changes, as you say, it's for both parties. At the beginning of the year, nobody knows where the market is exactly going to go.

The next question is from Kerry Smith from Haywood Securities.

Don, in the Q1 report you had given some guidance on what you thought the operating cost would be for the selenium management program. And then now, in this quarter, you've kind of said you're not sure what the capital operating cost would be, but that you are starting out the first plant at Line Creek. So should I interpret that to mean that you're thinking you can do better than the cost that you talked about previously or should I interpret that to mean that you're thinking the cost might be higher?

I don't think we've said that we're not sure. We have a distinct plan with real numbers and real program that we've gone through with the government. But we do hope to be able to do it for less. There are several different technologies that people are looking at that could change the game. And so in the longer-term, we hope one of those things will come to pass and help reduce cost. Maybe either Ian or Marcia could add further color.

We are currently working with the provincial government on developing our Elk Valley Water Quality Plan. And how that evolves will determine the level of control that we need to put in for our selenium management. And to some extent, that will vary the expected capital and operating cost. And we hope to have that plan submitted to the government in early in the third quarter this year. But as Don said, we also have a very expensive laboratory pilot plan program occurring at the moment with our Applied Research and Technology Center looking at all the alternatives technologies for selenium management and we are working actively to come up with the technology that is the most cost-effective.

So the costs you have given us previously are still accurate, it's just you are looking for ways to lower those potentially then, okay. And then the second question I had was just on Relincho again, Don, because you've kind of deferred this project. Is it more a function of the moly price that's driving that decision or is there something else that's giving you returns that aren't adequate?

No. It's exactly what I said before, that the sequence of projects that is QB2 first. And we haven't got the permit for QB2 and we won't have for sometime. And balancing that with the cash available, balance sheet and so on, just means that it's going to be further out. So we are on the way with Fort Hills. QB2 will come after that if and when we get the permit and Relincho after that.

The next question is from Grant Moenting from Paradigm Capital.

Just a follow-up to some of the other questions. In terms of your core dev team looking at copper, is there any potential that Teck would consider by immediate production versus build strategy? Or would you prefer to look only at projects that your team can develop in advance internally?

We would look at all options. And so yes, we could buy current production. We could buy a project if we thought it was a better project than the ones we already have in the pipeline. One of the advantages of having 76% of QB or 100% of Relincho is that we control the schedule and if there is something that was much better than those, then we could always put those in the backburner and go ahead with the new one. But we're looking at all the options.

And do you think you are sort of in an environment now where buying production, do you guys see it as cheaper as sort of maybe some of the other projects that you could develop or build or compare to Relincho or QB2, are we there?

It all depends. The landscape does shift from more value in buying to more value in building. In the long-term what we really want is a high quality long-life resource, and those are usually pretty difficult to buy. The most value creation for shareholders, if you can get one of those, it goes through cycle-after-cycle. And as I said, on different occasions, in the commodity business, whether it's copper, zinc or anything else, you're going to have cycles and inevitably you get all your money back in two or three good year, you just don't know when the two or three good years are going to be. So if you have a 50-year mine life, the odds of getting two or three good years five or six times are quite high, and if you back calculate your IRR then, you'll see that you get a very good return. So for us the priority is quality of resource and mine life, and that's what's going to really drive the value creation for shareholders.

And price I assume?

Well, yes. It's always trying to get the right value proposition. And as you noticed, we haven't been able to find that yet. So the sellers' expectations are often very high and we haven't been willing to pay it.

The next question is from Oscar Cabrera from Bank of America.

So a question on copper and then a question on coal, if I may. In terms of the projects and disciplined capital allocation in the current macro environment, could you provide some more color in terms of how you're thinking about the development of QB2? And I'm assuming that you'll be able to get permits within the next 18 months, should we think about this project as being developed until after Fort Hills is finished?

So here's how we think about it. If we get the SEIA filed in end of this year, just conceptually, and then it takes maybe 18 months to get the permit. Historically, it's been faster than that, but I think we have to consider that. My guess is by that stage copper will have gone through its period of time, when it's had a slight surplus and we'll be starting to move into a very deep deposit. And so my guess is that the cash flows that we'll be experiencing, and by the way we kind of have a positive outlook on zinc by that stage too. We'll probably be quite strong in that and we'll have the financing capability to go ahead with construction. Certainly, we think QB2 is an excellent project, solid returns, lower half are better than the cost curve, good geopolitical jurisdiction, very long life, expandable, and so on. So if we could snap our fingers and have that built, we would. We think it will be a core part of our portfolio for generations. We just have to get from here to there, and when we get there we'll then take a look at what the financing options are. And I suspect by the time we get the permit, we'll be in different commodity price environment.

And then, in terms of the coal, getting back to the pricing spot versus quarterly. I just want to understand a little bit better, if you can tell us, which are the clients? So I guess a better way to ask this is, on a regional basis, how are the coal sales segmented? And do you see the same mix in 2014?

Réal? Réal Foley: So, Oscar, 2012 if you recall, our sales profile was about 75% of overall sales into the Asian market that included around 30% to China and then the balance is sold to a Europe and the Americas. For 2013, our sales mix was pretty similar again. And just looking at what is happening in the market, we expect maybe slight rebalancing towards traditional markets. So it's a little bit of that maybe 1% or 2% in 2013. But we expect again maybe a little bit of rebalancing towards traditional customers in 2014, as the recovery continues to take hold across the majority of the market areas.

In fact, you're getting then requests from everyone, not just Asia?

That's correct. Operator we're coming up in the hours. So maybe just time for one more question, and then we'll have to cut it after that.

The next question is from Daniel Rohr from Morningstar.

A couple of questions. Highland Valley unit cost looked pretty good in the fourth quarter, I guess the operating cost at about $1.51 a pound, and I understand some of that's due to good grades. But can you comment on how much of the improvement you saw sustainable into 2014?

Ian?

I think we view that improvement is sustainable into 2014, and the parameters don't change particularly. And we are going to be getting the full positive impact of the new flotation plant. I guess we'd hope that with operating of that new plant with fewer larger flotation cells, we would actually get some improvement there. But we of course are going through a period where we're tying in that new system to the existing plant and there will be a period of bedding that down. So all-in-all, outlook is fairly similar.

And then with respect to currency sensitivities in the coal business, you've got site costs forecast at $55 to $60 a tone in 2014. Of that figure, what portion might be true Canadian dollar expenses like labor and services? And what share might be more globally fungible in nature, so diesel and explosives and parts and alike?

This is a guess, probably it's best to get back you on that with the details, because I'd be guessing on the number. All of the labor would be Canadian. A big chunk of the supply would be U.S. and other big chunk of supply would be Canadian. But in reality, they are based on U.S., so it's hard to say. We'll have to get back with some detail on that.

Great. Thanks very much, and just before we turn it back to the operator for a moment. For those of you who are still in queue, we didn't get a chance to answer your questions, Ron Millos and I will be available to take calls. So give us a call or send us an email, and we'll get back to you.

Greg, maybe I'll just make a summary comment.

Sure.

Just wanted to repeat what I said on institutional road shows. The Teck itself is operating very well. We are meeting our targets. The balance sheet is very strong. We had our best safety record in our history. We've been named the most sustainable mining company in the world. So the company is in very, very good shape. But we are in a period of commodity price weakness or in particular coal price weakness, and that means in the short-term, in the next couple of quarters you're going to see weaker financial results. And I don't know how many people invest for the medium-term these days, we're sort of three to four years out. But if you look out at that 2017 or so period, three years for now, we believe at that stage zinc is going to be in a very significant deficit and price should be very favorable. By that stage copper should have created a year or two of small surpluses and be going into significant deficit as well. We think the coal market will be cleared and Fort Hills will be almost built. So in terms of what Teck looks like at that stage, it could be very, very exciting. So for anybody who is a medium-term investor, you get paid a pretty good dividend along the way and the three-year outlook is very exciting. As miserable the next quarter or two is, the three-year outlook is equally and oppositely exciting. I just wanted to leave you with those thoughts.

Thank you all for joining us. And we look forward to the next quarterly call.

Thank you. The conference call has now ended. Please disconnect your lines at this time. And we thank you for your participation.